Federal government contractors who are awarded a contract frequently use a factoring company to help with the ongoing working capital. Using the invoices, the contractor can immediately get paid and use the capital for labor and expenses.

But when using a factoring company to finance your U.S. government contracts, be aware of the NOTICE OF ASSIGNMENT. If you are the PRIME contractor (billing the government directly) and have an FAR (Federal Acquisition Regulation) contract then you need to have the contract amended to put the NOS in place. Contract regulations require that in order for payments to be made to a third party – the lender, there must have an assignment in place that instructs the proceeds of the contract to that third party(the factoring company). This does not include Sub-contractors who bill their commercial customer who then bills the government. It also does not usually include city and state government contracts.

The NOS is typical paperwork and factors can prepare them, but you should let your contract officer know right away that your plans will involve securing outside financing. The contract officer has to sign off on the NOS and by giving them a heads up you won’t get bogged down waiting for the paperwork to go through proper channels. The actual content of the NOS is standard so there are no legal hurdles to jump.

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CCA
CCA is an active member of the International Factoring Association (IFA) which includes a commitment to high ethical standards. Over the years we have developed a wealth of experience having been involved in many complex transactions that required both speed and flexibility. With over 20 years operating in the invoice factoring industry, we are eager to work with you and partner in your success.

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